Michigan’s Two New Environmental Game-Changers
It’s a new year and there’s big news on the horizon for environmental regulations in Michigan. Two pieces of regulatory legislation passed at the end of 2018 are potential game changers for regulators, property investors, and lenders. They significantly increase available cleanup and Brownfield funding and may impact both cleanup criteria and the means and methods used for cleanup and due care compliance.
While their economic benefits won’t be realized overnight, on the whole they represent a major step forward in Michigan’s approach to environmental cleanup and redevelopment and the allocation of resources to those tasks.
Here, we take a closer look at these new statutes. What are some of their key elements? When will they take effect? How will they impact stakeholders?
SB-1244: A Cleanup Program with More Consistency, Certainty
Senate Bill 1244 was signed by outgoing Governor Rick Snyder in December 2018 and is anticipated to take effect in late March 2019. It provides several updates to Michigan’s cleanup program to make it more consistent with cleanup standards and approaches used at the federal level and by other states.
Just as important as understanding what the bill does is understanding what it doesn’t do: it does not change the cleanup criteria for contaminants in soil or groundwater. Those standards were signed into Michigan law in 2013, with some updates through early 2018.
Prior to this legislation, the Michigan Department of Environmental Quality (MDEQ) was working to establish new cleanup criteria, in some instances generating criteria hundreds of times more stringent than the 2013 cleanup criteria.
Understandably, some Michigan contamination standards, notably those established for Per- and Polyfluoroalkyl Substances (PFAS), are more restrictive than others. But much of the challenge of complying with the proposed cleanup criteria arises when there is uncertainty about the standards upon which criteria are based. SB-1244 restores confidence to the process, as the toxicology behind any new criteria will be rooted in established EPA data used by other state cleanup programs.
Here are a few of the key directives of SB-1244:
• The MDEQ must use toxicity values established by the U.S. Environmental Protection Agency (EPA), when developing new criteria.
• The law still includes a provision by which the MDEQ can, on a case-by-case basis, develop cleanup criteria based on different toxicological data, but only by following a formal public process.
• SB-1244 codifies the “footprint” to within which vapor migration represents a concern. Consistent with established standards and guidance used by the American Society for Testing and Materials (ASTM) and the Interstate Technology & Regulatory Council (ITRC), a 30-foot radius for petroleum contamination and a 100-foot radius for volatile non-petroleum contamination was adopted, beyond which assessment is not required. It also specifies that owners of vacant buildings (common in foreclosure) are not required to monitor or mitigate for vapor intrusion until the site is occupied.
• In an equally significant change, the new law provides for the use of indoor air monitoring to demonstrate compliance with vapor intrusion standards.
• Finally, SB-1244 provides guidance on reporting associated with cleanup. A property owner with a MDEQ-approved cleanup report can continue to rely on that report even if the state’s cleanup criteria change after it was approved. This provides more certainty for regulatory approvals over time, preventing the “goal posts” from being moved midway through a project.
Streamlining, Not Shortcutting
One of the more liberating aspects of SB-1244 is that it makes it possible for purchasers and lenders making property decisions to rely more heavily on indoor air quality instead of the far more costly and invasive presumptive installation of vapor intrusion controls.
Though this change helps streamline the process, make no mistake: it does not circumvent the steps of environmental due diligence.
Those steps include 1) a Phase 1 Environmental Site Assessment (ESA) to review the site’s history and identify possible past chemical releases; 2) a Phase 2 ESA to quantify the concentration of soil or groundwater contamination identified on site to determine if it represents a vapor encroachment condition; 3) additional targeted soil gas sampling to document whether those contaminants are also present in soil gas.
At that point, if contaminants exceed relevant standards, indoor air quality testing can be performed to document whether conditions are appropriate for occupancy. An ongoing regimen for testing can then be developed to account for seasonality and other variables that may contribute to vapor intrusion.
This is a far less onerous, alternative to presumptive mitigation systems like continuously operating sub-slab depressurization or epoxy barriers. It is a welcome addition to the range of acceptable options for vapor intrusion compliance. It is likely to facilitate more transactions as well as decrease the need to place significant funds in escrow for potential cleanups.
HB-4991: The Renew Michigan Fund
The other significant bill signed by Governor Snyder in December 2018 and anticipated to take effect in late March is House Bill 4991. It establishes a reliable, renewable source of funding for environmental cleanup and related activities. Highlights of the Renew Michigan Fund, administered by the MDEQ, include:
• An annual $69,000,000 allocation beginning in the 2018/2019 fiscal year
• 65 percent of funds (approximately $45 million) will be allocated for environmental cleanup and redevelopment activity, including Brownfield incentives
• 13 percent of funds will be used for waste management activities, including MEDQ monitoring and oversight
• 22 percent of funds will be used for recycling, including recycling program and market development and materials management planning
Securing an annual funding base of more than $40 million for cleanup is a major step forward for the state, paving the way for MDEQ to support dozens of cleanup projects annually, versus perhaps fewer than six in previous years.
HB-4991 promises to be a catalyst for economic growth in the state, returning property that might have remained idle and blighted to productivity.
Advice for the Year Ahead
Both SB-1244 and HB-4991 are scheduled to take effect by late March. PM Environmental will monitor the implementation of these new and updated regulations and will post relevant updates as they become available.
In the meantime, we recommend hefty doses of patience and flexibility. When it comes to environmental compliance, change is the only constant. Science evolves, regulations come and go, and new laws replace old ones. As a result, we’ve learned to exercise caution when using words like “never” and always.” Except when it comes to the two pieces of advice we seem to provide most frequently:
Never look for shortcuts in due diligence, and always partner with an expert.
Too many consultants may view these changes as cues to offer easy fixes and quick, cheap shortcuts. PM Environmental has the technical knowledge and foresight to take the long view. Put our expertise to work leveraging the opportunities presented by these new regulations to provide a comprehensive, big-picture assessment on which you can rely.
PM Environmental contributors to this article include Mike Kulka, P.E., Founder and CEO, Steve Price, CHMM, Principal and Vice President, and J. Adam Patton, CHMM, National Manager – Site Investigation Services.
January 29, 2019